Europe Unveils Preliminary Sanctions Against Russia

Tyler Durden's picture

While the preliminary terms of Europe's Russian sanctions were leaked yesterday, moments ago it was reported that EU ambassadors have reached an agreement on what the "hard-hitting" economic sanctions against Russia would look like even as details remain to still be ironed out ahead of a formal announcement of the final terms next week. According to Reuters, key measures suggested by the Commission include:

  • closing EU capital markets to state-owned Russian banks,
  • an embargo on arms sales to Moscow,
  • restrictions on the supply of energy and dual-use technologies.
  • a list of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

Of course, since France would blow a gasket if its Mistral ship was impacted by the sanctions, and since this really is just another populist measure not intended to really punish Russia (as that would mean a prompt shut off of European gas and an even prompter slide into a triple dip recession if not outright depression), Europe promptly "detoothed" the sanctions by announcing that they would not affect current supplies of oil, gas and other commodities from Russia, diplomats said.

As the map below shows, there is a dispersion of European opinions over Russian sanctions.

More from Reuters, whose details reveal that despite the attempt to show a unified stance, things in Europe are still very much split up between the various countries as any response by Russia would be proportional and impact some more than others:

Maja Kocijancic, spokeswoman for EU foreign policy chief Catherine Ashton, said there was still work to be done. "The direction of travel here is very clear but we are still travelling," she told reporters.

 

It was not immediately clear if the legal text would include all the options identified by the Commission. But EU officials said it would cover all four areas where sanctions have been proposed - restrictions on Russian access to European financial markets, defence and energy technology and equipment useful for both defence or civilian purposes.

 

Separately, the EU was due to publish later on Friday the names of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia's annexation of Crimea and detribalization of eastern Ukraine.

 

Member states will scrutinise the draft legal text over the weekend and give their feedback to the Commission on Monday, one diplomat said. A revised draft may be adopted on Tuesday, he said.

 

Remaining stumbling blocks were over issues such as existing contracts as well as on a so-called "off-ramp" - how to scale back sanctions if Russia began to play a more constructive role in de-escalating the situation in Ukraine, the diplomat said.

What does the EU want? Merely for Russia to stop doing what the CIA has been doing since February (as confirmed by Victoria Nuland) - to stop intervening in a proxy conflict between east and west, which nearly half a year later is at a stalement, despite countless provocations on both side.

Dutch Prime Minister Mark Rutte, whose country is seen as having a key role in shaping the EU response because it lost 194 citizens in the plane crash, said he would back sanctions unless Moscow halts weapons supplies to the rebels.

 

"We want as a country that has acquired a certain moral obligation as a result of this tragedy to promote Europe taking a common line on this," he told a parliamentary committee in The Hague.

 

"All indications are that Russia is continuing to arm the separatists," Rutte said, telling lawmakers he had spoken six times to Russian President Vladimir Putin since the disaster. "There's an easy way out for Russia: to distance themselves from the separatists, and stop arming them."

At the end of the day, however, despite the pomp and rhetoric, it is most likely that nothing of significant will actually happen:

"To a degree everyone is reverting to trying to protect their own national interests from harm," a senior European diplomat said.

 

The issue of upholding existing contracts with Russia is sensitive for France, which has agreed to sell Mistral helicopter carriers in a 1.2 billion euro ($1.61 billion) deal.

 

Another difficulty is balancing the pain of imposing the sanctions among EU member states. Britain is strong in financial services, Germany in technology and machinery, France in arms sales, while Italy is heavily dependent on Russia for energy.

Finally, it goes without saying that while Europe will ultimately end up doing something merely to piggyback on the latest round of Russian sanctions adopted by the US last week, the real question is how and what Putin will do in retaliation (aside from banning the Quarterpounder with Cheese of course), as that will demonstrate just how independent of the west the Eurasian, and BRIC, axis believes it has gotten.